July 12, 2008

Powering the Basin

Jul. 12--A decision expected in the next month could dramatically affect the future of energy in the area. But any way the announcement goes -- the Permian Basin is expected to win.

The Texas Public Utility Commission will meet Thursday. It'll have discussions on which of four multibillion-dollar transmission line proposals it'll accept.

While around 200 letters have been sent from West Texas to the PUC in favor of $5.75 billion Scenario 4, Gary Vest, economic development director for the Odessa Chamber of Commerce, said any of the proposals would spark energy-related projects in the area.

Among those Vest said would sign on once a transmission scenario is approved is Summit Power, the Colorado company considering building a $2.8 billion coal-gasification power plant at the Penwell site once reserved for FutureGen.

"All we need them to do is take action -- and we think it'll trigger our projects," Vest said.

While he didn't say where the plant site would be built, Summit chairman Donald P. Hodel said in this week's issue of Forbes magazine that the carbon dioxide produced and captured from the plant would be sold to energy companies in the Permian Basin.

While FutureGen billed itself as a "near-zero" emissions coal-fired plant, Summit hopes to capture up to 60 percent of CO2 for sequestration into old oilfields. Penwell was one of four finalists for FutureGen, which is now in limbo after being awarded to Mattoon, Ill.

The transmission lines are designed to transport power to the state's metropolitan areas, where plants can't be built because the areas are already stressed in environmental and other areas.

West Texas, on the other hand, has 100 percent attainment, Vest said.

"We can build anything we want out here," he said. "We don't have any environmental (concerns)."

West Texans can also expect to see more wind turbines pop up once a transmission plan is passed. While projects like Summit would be beneficial to the area economy, Dottie Roark, spokeswoman for the Electric Reliability Council of Texas, said wind power is the primary reason the lines to West Texas are being considered.

A study by ERCOT, which manages the electric grid and the deregulated electric market for 75 percent of the state, identified five areas in West Texas and the Panhandle that are receptive to wind energy.

Many of the areas, including Ector, Pecos and Upton counties, now have wind farms or have them planned.

"We have the most wind in West Texas, but the population centers are not in West Texas," Roark said.

Another facility Vest said would expand with more transmission lines is Navasota Energy's Quail Run Energy Center. The plant recently put its second phase online. A third would be constructed with more transmission lines.

While the third phase would only add around four employees, Vest said it would be a $200 million capital investment.

The third phase would add two more towering boilers to the four already standing at the site in the Odessa Industrial Development Corp.'s industrial park.

"The groundwork's already here," said Quail Run operations supervisor Wesley Curtis. "It'll use the exact same layout."

The PUC has two meetings remaining this month: Thursday and July 31.

A spokesman, who asked not to be identified, said a decision on a transmission line scenario would likely be made at either its July 31 or Aug. 14 meeting because Chairman Barry Smitherman would like to deal with the issue before Commissioner Paul Hudson leaves the commission Aug. 15.

PLUGGED IN

The scenarios before the Texas Public Utilities Commission, with number of additional megawatts the lines could carry and cost:

--Scenario 1-A: 12,053 MW, $2.95 billion.

--Scenario 1-B: 12,053 MW, $3.78 billion.

--Scenario 2: 18,456 MW, $4.93 billion.

--Scenario 3: 24,859 MW, $6.38 billion.

--Scenario 4: 24,419 MW, $5.75 billion.

ON THE DRAWING BOARD

Other economic development projects:

--Two companies, Mid-Con Compression and Industrial Piping Specialists are now building facilities at the OIDC Industrial Park.

--Project Nova is an oilfield related project considering building a new facility in the industrial park. It would add about 100 jobs to the area.

--Project Wolf would build a factory for corrosion resistant lining in oil piping. It is planning four new plants and is considering Odessa.

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